Why Apple Will Survive the iPhone Glitch

Its reputation for good design means customers trust it to fix mistakes. Microsoft has no such loyalty.

By

Jay Greene

Updated July 29, 2010 12:01 a.m. ET

Just a few days after Apple CEO Steve Jobs acknowledged that his company is not perfect, it posted quarterly results that nearly were.

Sales jumped across the board—from its new iPad line to Macintosh computers. Even as the global economy sputters, Apple's quarterly profits surged 78%. Most remarkably, though, sales of the beleaguered iPhone 4 continued to soar.

The device, which debuted June 24, has been pilloried by the press for antenna-reception problems and is now the subject of class-action lawsuits. Consumer Reports said it couldn't recommend buying the phone. But that hasn't stopped consumers. They've purchased more than three million of the iPhone 4 since its launch. Rather than slowing, demand continues to outpace Apple's ability to produce the smartphones.

ENLARGE

AFP/Getty Images

How is that possible? The reason is design. And not just the design of the iPhone 4, which looks slick and—despite the antenna glitch—still does more things better than just about every other mobile phone available. It's selling well because Apple's decade-long focus on design has bought it significant goodwill among consumers.

"Honestly, it doesn't faze me. I know Apple and I know they fix their mistakes," a 22-year-old student, Ross Beck, told the Associated Press on July 16. Apple's customers are willing to cut the company some slack because of its reputation.

Shortly after the original iPod became a cultural phenomenon, Mr. Jobs explained his theory about design to New York Times magazine columnist Rob Walker. Mr. Jobs said it's a mistake to think that design is merely about aesthetics. "That's not what we think design is," Jobs said in the 2003 article. "It's not just what it looks like and feels like. Design is how it works."

According to Apple, the vast majority of iPhone 4 buyers haven't been bothered by dropped calls, with return rates running less than 2%. And those who have kept the phones can choose from more than 200,000 applications on iTunes, giving them the ability to create the precise experience they want. That has engendered loyalty that most companies can only dream about.

Nearly every Apple product is an homage to industrial design—sleek, minimalist and modern. Apple's creative use of materials is without rival in techdom—everything from the seamless pane of glass on the iPad to the unibody aluminum sheath on the MacBook Air. The form of its gadgets is trim and almost universally symmetrical. Quite simply, its products look cool.

By contrast, Microsoft has struggled, despite all its other successes, to innovate in the design of consumer electronics. Nowhere was that more apparent than when it launched the Kin mobile phone line in May. Although the Kin One and Kin Two were both stylish enough to win plaudits from several reviewers, potential customers grumbled that the device wasn't able to upload photos to services such as Twitter. Others were put off by Verizon's $70 per month data plan.

After years of making software for cumbersome, poorly designed phones, Microsoft hasn't engendered much goodwill with the public. So when it came to the Kin, consumers were unwilling to overlook the phone's shortcomings. Sales were anemic, and Microsoft discontinued the product on June 30, just 48 days after it hit the market.

No doubt Apple still has a problem on its hands. Its ham-handed attempts to minimize the problems when they first emerged only exacerbated them. Recently, the company offered free "bumper" cases to iPhone 4 customers, which should resolve the antenna glitch. It won't likely end the hand-wringing soon.

But Apple faced a similar debacle two years ago that's instructive today. Back then, the company's new MobileMe service, which promised to synchronize email, calendar and contact information across multiple devices, didn't. Service outages prevented customers from accessing their email accounts and led to an onslaught of criticism similar to Apple's current crisis.

The MobileMe outage is a distant memory now. Apple rode out that storm on the goodwill it's earned by creating products customers crave. A reputation for great design bought the company an opportunity to recover from its mistake. That's what will allow Apple to weather the iPhone 4 fiasco too.

Mr. Greene, BusinessWeek's former Seattle bureau chief, is the author of a new book, "Design Is How It Works" (Portfolio, 2010).

This copy is for your personal, non-commercial use only. Distribution and use of this material are governed by our Subscriber Agreement and by copyright law. For non-personal use or to order multiple copies, please contact Dow Jones Reprints at 1-800-843-0008 or visit www.djreprints.com.